We are a biopharmaceutical royalty company focused on deploying capital and licensing technologies to acquire and create diversified royalty streams from high-value medicines. Our primary business is investing in and structuring royalty interests in mid- to late-stage development and commercial biopharmaceutical products, allowing us to generate long-duration, non-dilutive cash flows supported by a lean corporate cost structure. Capital deployment and technology licensing are the primary drivers of our long-term growth.

Our unaudited condensed consolidated financial statements include the financial statements of Ligand and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We have included all adjustments, consisting only of normal recurring adjustments, which we considered necessary for a fair presentation of our financial results. These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements included in our 2025 Annual Report. Interim financial results are not necessarily indicative of the results that may be expected for the full year.

The Company has one operating and reportable segment: investing in the clinical development and commercialization of high-value medicines. The Company’s Chief Operating Decision Maker (“CODM”) is Todd Davis, our Chief Executive Officer and director. The CODM uses net income (loss) as a single segment profit or loss measure to evaluate our single segment performance, and in deciding whether to invest in the existing assets, or to new potential opportunities. Our CODM relies on internal management reporting processes that provide information on segment operating income (loss) for making financial decisions and allocating resources. The CODM does not evaluate, manage or measure performance of segments using asset information.


	Three months ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Total revenues and income	$	63,693	$	47,627	$	115,415	$	92,960
Share-based compensation	(13,653)		(9,997)		(24,249)		(17,833)
Other segment items:
Amortization of intangibles	(8,097)		(8,258)		(16,194)		(16,515)
Depreciation of property and equipment	(118)		(264)		(237)		(777)
Interest income	7,298		1,621		13,953		3,392
Interest expense	(1,748)		(1,153)		(3,495)		(2,020)
Other *	1,133		(24,729)		(50,030)		(96,811)
Net income (loss)	$	48,508	$	4,847	$	35,163	$	(37,604)

* Other for the three months ended June 30, 2026 and 2025 include the amount of other general, administrative, research and development expenses of $30.0 million and $16.5 million (net of share-based compensation and depreciation expenses), respectively, and additional income and expense items that are presented in the condensed consolidated statements of operations such as fair value adjustments to partner program derivatives, cost of Captisol and other non-operating income and expenses.

Other for the six months ended June 30, 2026 and 2025 include the amount of other general, administrative, research and development expenses of $42.3 million and $77.0 million (net of share-based compensation and depreciation expenses), respectively, and additional income and expense items that are presented in the condensed consolidated statements of operations such as fair value adjustments to partner program derivatives, cost of Captisol and other non-operating income and expenses.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes. Actual results may differ from those estimates and assumptions.

Our revenue is generated primarily from royalties on sales of products commercialized by our partners, supplemented by Captisol material sales and contract revenue from license fees and milestone payments. We partner with leading biopharmaceutical companies to leverage their capabilities in late-stage development, regulatory execution, and commercialization, while we focus on disciplined capital deployment, portfolio construction, and risk management. This also allows us to leverage each partner's asset infrastructure in sales and marketing, manufacturing and R&D to avoid high-cost infrastructure ourselves.

For all revenue transactions, we apply the five‑step model in accordance with ASC 606, Revenue from Contracts with Customers, to determine revenue: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

We receive royalty revenue from intangible royalty assets based on sales by our partners of products covered by patents that we or our partners own under contractual agreements. We do not have future performance obligations under these license arrangements. We generally satisfy our obligation to grant intellectual property rights on the effective date of the contract. However, we apply the royalty recognition constraint required for sales‑based royalties, which requires royalties to be recorded no earlier than when the underlying sale occurs. Accordingly, royalties on sales of products commercialized by our partners are recognized in the quarter in which the product is sold. Our partners generally report sales information to us on a one‑quarter lag. As a result, we estimate expected royalty proceeds based on an analysis of historical experience and interim data provided by our partners, including publicly announced sales. Differences between actual and estimated royalty revenues, which have not been material, are adjusted in the period in which they become known, typically the following quarter.

We account for financial royalty assets related to developmental pipeline or recently commercialized products on a non-accrual basis. Developmental pipeline products are non-commercialized, non-approved products that require FDA or other regulatory approval, and thus have uncertain cash flows. Newly commercialized products typically do not have an established and reliable sales pattern, and thus have uncertain cash flows.

Revenue from Captisol sales is recognized when control of Captisol material is transferred or intellectual property license rights are granted to our customers in an amount that reflects the consideration we expect to receive in exchange for those products or rights. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. For Captisol material or intellectual property license rights, we consider our performance obligation satisfied once we have transferred control of the product or granted the intellectual property rights, meaning the customer has the ability to use and obtain the benefit of the Captisol material or intellectual property license rights. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Sales tax and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost of freight and shipping when control over Captisol material has been transferred to the customer as an expense in cost of Captisol. We expense incremental costs of obtaining a contract when incurred if the expected amortization period of the asset is one year or less or the amount is immaterial. We did not incur any incremental costs of obtaining a contract during the periods reported.

Our contracts with customers often include variable consideration in the form of contingent milestone payments. We include contingent milestone payments in the estimated transaction price when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. These estimates are based on historical experience, anticipated results and our best judgment at the time. If the contingent milestone payment is based on sales, we apply the royalty recognition constraint and record revenue when the underlying sale occurs. Significant judgments are required in determining the transaction price for our sales of intellectual property. Because of the risk that products in development with our partners will not reach development milestones or receive regulatory approval, we generally recognize any contingent payments that would be due to us upon the development milestone or regulatory approval.


	Three months ended				Six months ended
	June 30,				June 30,
	2026		2025		2026		2025
Royalties
Filspari	$	13,567	$	6,578	$	24,889	$	11,879
Kyprolis	7,044		8,803		13,784		13,526
Ohtuvayre	4,144		2,084		7,131		3,496
Rylaze	3,201		2,864		6,422		5,983
Capvaxive	2,316		2,250		4,285		3,135
Vaxneuvance	1,351		2,643		2,961		3,928
Teriparatide injection	1,470		2,298		2,791		3,489
Other	4,269		2,564		8,030		6,235
Revenue from intangible royalty assets	37,362		30,084		70,293		51,671
Qarziba	6,150		5,885		12,449		11,327
Ohtuvayre inventors	3,294		—		6,341		—
Other	1,226		428		1,907		888
Income from financial royalty assets	10,670		6,313		20,697		12,215
Total royalties	48,032		36,397		90,990		63,886

Captisol	7,978		8,287		16,632		21,747
Contract revenue and income
Contract revenue	2,683		1,926		2,793		6,310
Income	5,000		1,017		5,000		1,017
Total contract revenue and income	7,683		2,943		7,793		7,327
Total revenues and income	$	63,693	$	47,627	$	115,415	$	92,960


June 30, 2026	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
U.S. Government Agencies	$	145,569	$	—	$	(393)	$	145,176
U.S. Treasuries	65,430		—		(164)		65,266
Corporate notes/bonds	52,307		—		(130)		52,177
Corporate equity securities	20,850		63,477		(3,314)		81,013
Commercial paper	7,430		—		(6)		7,424
Total short-term investments	$	291,586	$	63,477	$	(4,007)	$	351,056

December 31, 2025
U.S. Government Agencies	$	175,780	$	89	$	(38)	$	175,831
Corporate notes/bonds	124,249		98		(52)		124,295
U.S. Treasuries	113,055		137		(4)		113,188
Commercial paper	74,473		21		(8)		74,486
Corporate equity securities	15,733		58,852		(3,791)		70,794
Total short-term investments	$	503,290	$	59,197	$	(3,893)	$	558,594

Our investment policy is capital preservation and we only invest in U.S.-dollar denominated investments. Allowances are recorded for available-for-sale debt securities with unrealized losses. This limits the amount of credit losses that can be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

We held a total of 103 investments that were in an unrealized loss position with $0.7 million of unrealized losses as of June 30, 2026. We believe that we will collect the principal and interest due on our debt securities that have an amortized cost in excess of fair value. The unrealized losses are largely due to changes in interest rates and not due to unfavorable changes in the credit quality associated with these securities that impacted our assessment of collectability of principal and interest. As of June 30, 2026, we did not intend to sell these securities, and it was not more likely than not that we would be required to sell them before recovery of their amortized cost basis. No credit losses were recognized for the three and six months ended June 30, 2026 and 2025.

Our accounts receivable arise primarily from sales on credit to customers. We establish an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined using the loss-rate method, which requires an estimation of loss rates based on historical loss experience adjusted for factors relevant to determining the expected collectability of accounts receivable. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers.

During the three months ended June 30, 2026 and 2025, we considered the current and expected future economic and market conditions and determined that increases of $0.2 million and $0.1 million, respectively, were required in the allowance for credit losses. During the six months ended June 30, 2026 and 2025, we considered the current and expected future economic and market conditions and determined that increases of $0.03 million and $0.4 million, respectively, were required in the allowance for credit losses.

Inventory, which consists of finished goods (Captisol), is stated at the lower of cost or net realizable value. We determine cost using the specific identification method. We analyze our inventory levels periodically and write down inventory to net realizable value if it has become obsolete, has a cost basis in excess of its expected net realizable value or is in excess of expected requirements. There was no obsolete inventory charge recorded during the three and six months ended June 30, 2026 and 2025. In addition to finished goods, as of June 30, 2026 and December 31, 2025, inventory included prepayments of $1.6 million and $2.1 million, respectively, to our supplier for Captisol.


	June 30, 2026		December 31, 2025
Indefinite-lived intangible assets
Goodwill	$	101,541	$	101,541
Definite-lived intangible assets
Complete technology	29,619		29,619
Less: accumulated amortization	(21,763)		(20,809)
Trade name	2,642		2,642
Less: accumulated amortization	(2,043)		(1,976)
Customer relationships	29,600		29,600
Less: accumulated amortization	(22,889)		(22,144)
Contractual relationships	360,000		360,000
Less: accumulated amortization	(165,922)		(151,494)
Total definite lived intangible assets	209,244		225,438
Total goodwill and other identifiable intangible assets, net	$	310,785	$	326,979

Although a financial royalty asset does not have the contractual terms typical of a loan (such as contractual principal and interest), we account for financial royalty assets under ASC 310, Receivables. Our financial royalty assets are classified similar to loans receivable and are measured at amortized cost using the prospective effective interest method described in ASC 835-30 Imputation of Interest.

The effective interest rate is calculated by forecasting the expected cash flows to be received over the life of the asset relative to the initial invested amount. The effective interest rate is recalculated in each reporting period as the difference between expected cash flows and actual cash flows are realized and as there are changes to expected future cash flows.

The gross carrying value of a financial royalty asset is consisting of the opening balance, or net purchase price for a new financial royalty asset, which is increased by accrued interest income (except for assets under the non-accrual method) and decreased by cash receipts during the period to arrive at the ending balance.

We evaluate financial royalty assets for recoverability on an individual basis by comparing the effective interest rate at each reporting date to that of the prior period. If the effective interest rate is lower for the current period than the prior period, and if gross cash flows have declined (expected and collected), we record a provision expense for the change in expected cash flows. The provision is measured as the difference between the financial royalty asset’s amortized cost basis and the net present value of the expected future cash flows, calculated using the prior period’s effective interest rate. In a subsequent period, if there is an increase in expected future cash flows, or if actual cash flows are greater than cash flows previously expected, we reduce the previously established cumulative allowance in part or in full.

In addition to the above allowance, we recognize an allowance for current expected credit losses under ASC 326, Financial Instruments – Credit Losses on our financial royalty assets. The credit rating, which is primarily based on publicly available data and updated quarterly, is the primary credit quality indicator used to determine the credit loss provision.

When we are reasonably certain that a part of a financial royalty asset’s net carrying value (or all of it) is not recoverable, we recognize an impairment which is recorded in financial royalty assets impairment on the consolidated statements of operations. To the extent there was an allowance previously recorded for this asset, the amount of such impairment is written off against the allowance at the time that such a determination is made. Any future recoveries from such impairment are recognized when cash is collected in the respective period earnings.

We enter into transactions where we agree to fund a portion of the research and development (“R&D”) performed by our partners for products undergoing late-stage clinical trials in exchange for future royalties or milestones if the products are successfully developed and commercialized. In accordance with ASC 730, Research and Development, we account for the funded amounts as R&D expense when we have the ability to obtain the results of the R&D, the transfer of financial risk is genuine and substantive and, at the time of entering into the transaction, it is not yet probable that the product will receive regulatory approval. If these conditions are not met, we may record the funded amounts as a financial royalty asset. We may fund R&D upfront or over time as the underlying products undergo clinical trials.

Royalties earned on successfully commercialized products generated from R&D arrangements are recognized as revenue from intangible royalty assets in the same period in which the sale of the commercialized product occurs. Fixed or milestone payments receivable based on the achievement of contractual criteria for products arising out of our R&D arrangements are recognized as contract revenue and income in the period that the milestone threshold is met.

As a result of our early adoption of ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) (“ASU 2025-07”), certain assets previously accounted for as derivatives qualified for a new derivative scope exception introduced by ASU 2025-07, and are now accounted for as financial royalty assets effective January 1, 2025. Such assets include (1) our rights in future milestone and royalty payments from Agenus partner programs, (2) rights to receive from Primrose Bio 50% of milestone payments on certain contracts previously entered into by Primordial Genetics (“Primrose mRNA”), and (3) the Castle Creek Milestone (as defined in Note 3, Investment Transactions). For additional information, see Note 4, Financial Royalty Assets, net.


	June 30, 2026		December 31, 2025
LeonaBio Series A Warrant	$	923	$	—
Total current derivative assets(1)	$	923	$	—

Orchestra Warrant	$	6,810	$	3,799
Castle Creek Warrant	5,250		4,989
Pelthos Conversion Option	3,303		3,432
Agenus Warrant(2)	1,226		1,322
LeonaBio Warrants (noncurrent)	922		1,461
Arecor Warrant	402		629
Total noncurrent derivative assets	$	17,913	$	15,632

(2) In connection with the entry into the Purchase and Sale Agreement with Agenus in May 2024, Agenus issued us a five-year warrant (“Agenus Warrant”) to purchase 867,052 shares of its common stock, at an exercise price equal to $17.30. On December 22, 2025, we entered into an amendment to the Purchase and Sale Agreement with Agenus reducing the Agenus Warrant exercise price from $17.30 to $7.50. The fair value of the Agenus Warrant is determined using a

A change in the fair value of warrants and options, which amounted to $1.4 million for the three months ended June 30, 2026, was included within other non-operating expense, net, in the condensed consolidated statement of operations. This amount included $1.9 million related to the conversion option of the Pelthos Convertible Notes (the “Pelthos Conversion Option”), $0.3 million for the Orchestra Warrant, and $0.04 million for the Castle Creek Warrant, partially offset by $(0.6) million related to the LeonaBio Warrants, $(0.2) million for the Agenus Warrant, and $(0.1) million related to the Arecor Warrant.

A change in the fair value of warrants and options, which amounted to $0.5 million for the six months ended June 30, 2026, was included within other non-operating expense, net, in the condensed consolidated statement of operations. This amount included $0.4 million related to the LeonaBio Warrants, $0.3 million related to the Castle Creek Warrant, and $0.3 million related to the Orchestra Warrant, partially offset by $(0.1) million related to the Pelthos Conversion Option, $(0.2) million related to the Arecor Warrant, and $(0.1) million related to the Agenus Warrant.

A change in the fair value of the Agenus partner programs, the Primrose mRNA derivative, and the Castle Creek Milestone, which amounted to $(0.8) million, $(0.7) million, and $0.3 million, respectively, for the three months ended June 30, 2025, was included within fair value adjustments to partner program derivatives in the condensed consolidated statement of operations. A change in the fair value of other derivatives, which amounted to $1.2 million for the three months ended June 30, 2025, was included within other non-operating expense, net, in the condensed consolidated statement of operations. This amount included $1.4 million related to the Agenus Warrant and $(0.2) million related to the Castle Creek Warrant.

A change in the fair value of the Agenus partner programs, the Primrose mRNA derivative, and the Castle Creek Milestone, which amounted to $(0.5) million, $(0.6) million and $0.3 million, respectively, for the six months ended June 30, 2025, was included within fair value adjustments to partner program derivatives in the condensed consolidated statement of operations. A change in the fair value of other derivatives, which amounted to $0.6 million for the six months ended June 30, 2025, was included within other non-operating expense, net, in the condensed consolidated statement of operations. This amount included $0.9 million related to the Agenus Warrant and $(0.3) million related to the Castle Creek Warrant.

The Company accounts for investments in entities over which it has significant influence (generally defined as ownership interest of 20% or more) using the equity method of accounting. Under this method the investment is initially recorded at cost and subsequently adjusted for the Company’s share of the investee’s earnings or losses and any dividends received, unless the fair value option under ASC 825-10 is elected. Such selection is made on an instrument-by-instrument basis and is irrevocable.

Equity method investments for which the Company has elected the fair value option are measured at fair value, with changes in fair value recognized in earnings each reporting period and presented as gain (loss) from change in fair value of equity method investments and other investments in our condensed consolidated statements of operations. The Company elected the fair value option for its equity method investment in Pelthos. The election was made to simplify the accounting and reporting process, as Pelthos is a publicly traded entity with a readily available market price.

Equity method investments for which the Company has not elected the fair value option are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any impairment of equity method investments is presented as gain (loss) from change in fair value of equity method investments and other investments in our condensed consolidated statements of operations. These equity method investments are reviewed for indicators of impairment at each reporting period and are written down to fair value if there is evidence of a loss in value that is other‑than‑temporary. The Company did not elect the fair value option for its equity method investment in Primrose Bio. There was no impairment to our equity method investment in Primrose Bio during the three and six months ended June 30, 2026 and 2025.

The equity method investment in Primrose Bio is adjusted for the Company’s share of the investee’s earnings or losses and for any dividends received. The Company’s share of Primrose Bio’s earnings or losses is presented within other non‑operating expense, net, in our condensed consolidated statement of operations. The Company does not record its share of the investee’s losses once the investment balance has been reduced to zero. The Company resumes recognition of its share of the investee’s earnings only after previously unrecognized losses have been recovered. As of December 31, 2024, the equity method investment in Primrose Bio had been written down to zero. The Company has no outstanding advances, guarantees, or commitments to fund Primrose Bio’s losses. Therefore, the Company’s proportionate share of Primrose Bio’s net loss for the three and six months ended June 30, 2026 and 2025 was not recorded. Ligand owned 31.5% of Primrose Bio’s outstanding equity as of both June 30, 2026 and December 31, 2025.

Other investments represent our investments in equity securities of third parties in which we do not have control or significant influence. Our equity securities that do not have a readily determinable or estimable fair value are measured using the measurement alternative in accordance with ASC 321, which is cost less impairment, if any, adjusted for observable price changes in orderly transactions for the identical or similar investment of the same issuer. Any impairment or upward or downward adjustment recognized during the period is presented as gain (loss) from change in fair value of equity method investments and other investments in our condensed consolidated statements of operations.

Our investment in Pelthos Series A preferred shares is measured at fair value, with changes in fair value recognized as gain (loss) from change in fair value of equity method investments and other investments in our condensed consolidated statements of operations. For additional information, see Note 2, Pelthos Transaction.

Accrued liabilities consist of the following (in thousands):


	June 30, 2026		December 31, 2025
Royalties owed to third parties	$	11,356	$	16,202
Professional fees	8,239		1,997
Compensation	4,635		6,388
Value-added tax	1,824		1,753
Subcontractor	1,756		1,756
Accrued interest	863		1,307
Customer deposit	621		621
Other	2,573		1,429
Total accrued liabilities	$	31,867	$	31,453

In connection with the acquisition of CyDex in January 2011, we recorded a contingent liability for amounts potentially due to holders of the CyDex CVRs and former license holders. The liability is periodically assessed based on events and circumstances related to the underlying milestones, royalties and material sales.

Share-based compensation expense for awards to employees and non-employee directors is a non-cash expense and is recognized on a straight-line basis over the vesting period. The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands):

A limited amount of performance-based restricted stock units (“PSUs”) contain a market condition based on our relative total shareholder return ranked on a percentile basis against the Nasdaq Biotechnology Index over a three-year performance period, with a range of 0% to 200% of the target amount granted to be issued under the award. Share-based compensation cost for these PSUs is measured using the Monte Carlo simulation valuation model and is not adjusted for the achievement, or lack thereof, of the performance conditions.

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Diluted net loss per share is computed using only the weighted average number of common shares outstanding during the period, as potentially dilutive securities are excluded when a net loss is reported.

Potentially dilutive common shares consist of shares issuable under the 2030 Notes (as defined below), 2031 Notes (as defined below), warrants issued in connection with the 2030 Notes, warrants issued in connection with the 2031 Notes, stock options, and restricted stock. The 2030 Notes and 2031 Notes are considered to be Instrument C, under which the Company must settle the accreted value of the debt instrument in cash upon conversion and may choose to settle the conversion spread in cash, shares, or a combination of cash and shares. The dilutive effect of Instrument C is limited to the conversion premium, which is reflected in the calculation of diluted earnings per share as if it were a freestanding written call option on the Company’s shares. The warrants will have a dilutive effect to the extent the market price per share of common stock exceeds the applicable exercise price of the warrants.

Potentially dilutive common shares from stock options and restricted stock are determined using the average share price for each period under the treasury stock method. In addition, the following amounts are assumed to be used to repurchase shares: proceeds from exercise of stock options and the average amount of unrecognized compensation expense for the awards. For additional information, see Note 8, Stockholders’ Equity.


	Three months ended		Six months ended
	June 30,		June 30,
	2026	2025	2026	2025
Weighted average shares outstanding:	20,063	19,327	19,974	19,259
Dilutive potential common shares:
Restricted stock	297	179	336	—
Stock options	1,068	420	1,014	—
2030 Convertible Senior Notes	409	—	224	—
Shares used to compute diluted loss per share	21,837	19,926	21,548	19,259

Potentially dilutive shares excluded from calculation due to anti-dilutive effect:
Restricted stock	—	133	28	87
Stock options	384	1,227	274	975
2031 Convertible Senior Notes	877	—	441	—
Warrant related to the 2030 Notes	2,362	—	2,362	—
Warrant related to the 2031 Notes	2,094	—	1,053	—
Anti-dilutive shares	5,717	1,360	4,158	1,062

The Euro is the functional currency of Apeiron and the corresponding financial statements have been translated into U.S. dollars in accordance with ASC 830-30, Translation of Financial Statements. Assets and liabilities are translated at end-of-period rates while revenues and expenses are translated at average rates in effect during the period in which the activity took place. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss).

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures. This update requires entities to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively. We are currently evaluating the new guidance to determine the impact it may have on our condensed consolidated financial statements and related disclosures.